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Home arrow Law arrow The principles of the law of restitution
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(i) Capital Value of Land

Where the court declines to restore the land which has been expropriated by the defendant to the claimant, the court will assess the capital value of the land. This may be determined simply by reference to the market value of the land, which reflects the value of the claimant’s loss and the defendant’s gain. In some circumstances, however, the court will consider more carefully what the parties would reasonably have negotiated for the claimant to sell the land to the defendant, which may be higher than the market value of the land if the defendant would have paid more for the land than the market value. This is illustrated by Ramzan v Brookwide Ltd,[1] where a store room[2] of an Indian restaurant had been unlawfully incorporated by the defendant into its neighbouring property to form a residential flat which was then leased. It was recognized that, in lieu of an order reinstating the store room to the claimant, the defendant was required to pay for its capital value. In assessing this value, the court had regard to the particular value of the store room to the defendant, who possessed the flat into which the store room was incorporated.[3] This reflects a restitutionary analysis. It cannot be considered to reflect a loss to the claimant, because it was found that the claimant would never have been willing to negotiate with the defendant for the sale of the store room. Increasing the capital value of the property to reflect the particular advantage to the defendant in having the store room is consistent with the general approach to the identification and valuation of an enrichment for purposes of a claim in unjust enrichment. That approach involves two tests to determine the value of a benefit, namely the market value and the objective value where the market would have taken into account particular circumstances of the defendant in valuing the enrichment.[4] If a person in the position of the defendant would gain particular advantages from the land, this should be taken into account when valuing the defendant’s benefit. So, if a store room in the claimant’s property is worth more to the defendant because it increases the size of the flat which the defendant leased, it is appropriate for this to be taken into account when assessing the value of the defendant’s benefit in unlawfully expropriating the store room.

  • [1] 62 This was a ‘flying freehold’: the store room was physically located in the defendant’s property but it
  • [2] belonged to the claimant who had access to it from his own property.
  • [3] See also Horsford v Bird [2006] UKPC 3, p 430, above, where the capital value of the land which had beenexpropriated by the defendant was also assessed with reference to the particular value of the land to thedefendant, so that its value was considered to be higher than the market value.
  • [4] Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938. See p 65, above.
 
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